Industry Trends

What Does Record-Setting Holiday Season 2021 Mean for Your Supply Chain’s Future

Every single year, small businesses to large corporations attempt to optimize their supply chain before the tidal wave of the holiday season. During the holiday season of 2021-2022, however, things were different, as strong demand forces have faced new supply chain challenges head-on.

A record-setting holiday season of 2021-2022: how it was for supply chains?

Recent disruptions, such as global port congestion, shipping delays due to China’s energy shortage, pandemic limitations, and an increase in omnichannel shopping made shoppers gear up earlier than usual for sales and availability at the end of 2021. Retailers and manufacturers revised their strategies to leave the customers satisfied and grow sales. 

Omnichannel was not only about the online platform or a store, but rather about the hybrid experience like click-and-collect shopping. Value Retail, a company that manages luxury shopping outlets globally, spent at least 4,000 hours training its employees on virtual shopping to cater to online appointments this season.

Deloitte estimated e-commerce sales will grow from 11% to 15%, year-over-year, between November and January 2022. Eventually, the recent holiday shopping craze demonstrated the following results:

To visualize a record-setting year, let’s take a closer look at data from the US Bureau of Labor Statistics.

Some changes also happened in the transportation and supply chain directly. The most recent edition of the transportation supply chain dashboard highlights a few of the factors that contributed to the success of the Christmas shopping season. First, in 2021, ports processed a record volume of freight. 

The Ports of Los Angeles and Long Beach, which handle 40% of containerized imports into the United States, handled 14% more containers than the previous year over the same time.

The portrait of the 2021 holiday shopper

But what do shoppers today want? McKinsey surveyed more than 2,000 shoppers in the US to understand the behavior model of a modern customer. The results showed a few interesting observations:

  • Customers are aware of global delays and rush to make purchases earlier. In fact, around 45% of shoppers started to shop in October.
  • Only 11% of respondents waited until December to start buying, compared to nearly 25% of customers in years prior to COVID-19 who said they shopped in the weeks leading up to Christmas.
  • 51% of respondents were concerned about product availability and 45% worried about long shipping lead times.
  • 70% of holiday shoppers said they would turn to another retailer or supplier if they didn’t find their desired product, instead of waiting for restocking.
  • 60% to 70% of customers reported shopping across different channels, both online and offline. 

Such changes in purchasing and spending patterns are not coincidental: supply chain challenges will likely stretch into 2022 as businesses face global disruptions, the growing costs of transportation, labor shortages, and general economic uncertainty. 

All of these factors inevitably create a challenging time for global supply chains, however, with proper planning and long-term perspective, supply chain executives and retailers can steer the business to succeed through the busy season.

Apart from consumer packaged goods, many other industries have the import volumes up this season, like electronics and furniture. 

Furniture imports, for instance, are up 32% in 2021 through September, resulting in increased delivery delays, while audio and television imports are up 26%. 

What numbers tell us about holiday season 2022

Considering that at the end of 2021 sales across all channels reached record highs, the dynamics are likely to stay alike throughout 2022. So, it’s time to make a few conclusions and learn from the last year. 

Companies that can remain flexible, predict demand early, and pivot to meet it will receive their own holiday presents.

Short-term fixes, long-term strategy

Retailers should prioritize buying the most critical commodities for this Christmas season to avoid short-term inventory shocks. Furthermore, retailers should invest now in supply chain resilience and prepare for new cost realities, as supply-chain difficulties are projected to linger through 2022. 

Diversifying and increasing redundancy in suppliers and transportation, planning for more localized fulfillment and using techniques such as micro warehousing, and increasing real-time insight into inventory locations across the supply chain are all examples of this. Take, for example, Costco, which has just hired three of its own ships to transport products between Asia and North America in the coming year.

Stock as early as possible, or source from local suppliers

If a large part of your supply chain relies on fulfillment from overseas suppliers, planning to stock up right now is certainly too late; however, if the specifics of the business allow this, shortening the supply chain might help. 

Sourcing from local suppliers has many benefits, including a more agile supply chain, shorter delivery times, fewer chances of delay, and the provision of support for the local business community. 

Cost-wise, regional suppliers might be a more expensive option, however, if the business is short on products of high interest, it’s better to invest in on-time supplies for long-term benefits. 

Essentially, not all businesses can practice such an approach, but if there are any local manufacturers to support customer demand during shortages and delays, it’s worth giving them a try.

Optimization through visibility and technology

With all the given circumstances, strategic planning is at the forefront of a business’s success. It’s impossible to analyze and optimize the supply chain workflow without a deep understanding of all processes, and access to valuable data across every stage. 

For this reason, companies should rely on sophisticated technology solutions to forecast, plan and optimize their efforts. Predicting demand plays a vital role in a retailer’s supply chain, so investing in a visibility platform is an essential step to data-driven decisions and accurate forecasts.

Apart from the sales perspective, technology also allows for the implementation of a robust risk management strategy, as it helps recognize emerging obstacles and proactively manage supply chain exceptions. This way, retailers have a long-term vision of the supply chain, but also stay flexible and resilient in the face of unexpected challenges. 

Supply chain visibility software allows all supply chain stakeholders to see activities, transactions, and shipments in a clear and integrated environment. It also enables businesses to increase profits while maintaining quality in order to improve supply chain efficiency.

While businesses cannot manage all current operations on a global scale, your supply chain may nevertheless be resilient and agile.

Agistix, for example, is a comprehensive supply chain visibility platform that connects with any carrier system and acts as a single hub for all incoming data at every level of the supply chain. With such technological solutions in place, there will be less friction during the 2022 holiday season. Learn more about Agistix’s sophisticated supply chain solutions today. 

Author

Trevor Read

President at Agistix based in San Francisco. I am an entrepreneur with a passion for data, and technology. I am results-oriented and committed to developing fast-deployment solutions to help customers seize the new opportunity coming from big data in the global supply chain.